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The expat-preneur:
conceptualizing a growing
international career phenomenon
Charles M. Vance
College of Business Administration, Loyola Marymount University,
Los Angeles, California, USA
Yvonne McNulty
Department of Management, Singapore Institute of Management University,
Singapore, Singapore, and
Yongsun Paik and Jason D’Mello
College of Business Administration, Loyola Marymount University,
Los Angeles, California, USA
Abstract
Purpose –The purpose of this paper is to introduce the emerging international career phenomenon of
the “expat-preneur,”an individual temporarily living abroad who initiates an international new
venture (self-employment) opportunity in a host country.
Design/methodology/approach –This analysis is based on the authors’observance of developing
trends that also are showcased in the international management and IHRM literatures.
Findings –Two general types of expat-preneurs are proposed: first, pre-departure expat-preneurs
who move abroad with a preconceived entrepreneurial purpose; and second, transitioned expat-preneurs
who, only while abroad, recognize and pursue a new venture opportunity, either from the status of self-
initiated expatriates (SIEs) looking for local employment or while serving as organization-assigned
expatriates and leaving the organization at the end of the assignment or midstream.
Research limitations/implications –Distinctions between expat-preneurs and typical business
SIEs are explored, and important contributions that expat-preneurs may provide in strengthening local
host country economies are considered. Directions for further systematic and empirical research on the
expat-preneur international career phenomenon are discussed.
Practical implications –Important mutually beneficial implications are noted for multinationals in
supporting expat-preneurs’long-term success in host country environments.
Originality/value –This conceptual study provides a valuable recognition and analysis of an
important and growing international career category that has received scant attention in the literature.
This research has important implications for the understanding of new international career dynamics
associated with the growing trend of international entrepreneurship, especially valuable for emerging
markets and of interest to multinational firms interested in the movement of their human capital.
Keywords Entrepreneurs, Careers, Expatriates
Paper type Conceptual paper
Introduction
Despite ongoing uncertainties and occasional setbacks, the globalization train
continues to press inexorably forward and at an accelerating pace. With greater
openness of national borders and incentives encouraging foreign direct investment
(FDI), organizations of all sizes are recognizing and exploiting opportunities for
expansion in foreign markets (Ernst and Young, 2012; Fang et al., 2010; Collings, 2014).
This recognition is particularly strong among the very innovative and flexible
entrepreneurial sector whose use of partnerships and networks, and especially
Journal of Global Mobility
Vol. 4 No. 2, 2016
pp. 202-224
© Emerald Group PublishingLimited
2049-8799
DOI 10.1108/JGM-11-2015-0055
Received 23 November 2015
Revised 27 March 2016
28 April 2016
Accepted 28 April 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2049-8799.htm
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telecommunications and other technological advancements, are leveling the playing
field for competing with more established multinational corporations (MNCs; Mainela
et al., 2014; Oviatt and McDougall, 2005).
In its comprehensive 2015 survey of firms with international operations, Brookfield
Global Relocation Services found, for the sixth consecutive year, that more than
50 percent of company revenues were generated outside the country of company
headquarters, with 45 percent of respondents expecting their organization-assigned
expatriate (OE) population to increase to help address this international business
expansion. McKinsey Global Institute (2013) found that the greatest optimism is
reflected among relatively new or revitalized companies headquartered in emerging
markets. These data reflect the growing trend of international entrepreneurship among
global firms (Mathews and Zander, 2007; Bingham, 2009). However, the role of the
individual and associated career dynamics in international entrepreneurship has
received much less attention (see Jones and Casulli, 2014).
Besides this lack of attention toward increasing understanding of individual
international career dynamics underlying growing international entrepreneurial
activity, much expatriate literature continues to maintain a traditional “circulationist”
perspective (Gaillard and Gaillard, 1997), where the expatriate cyclic career trajectory is
seen as largely determined by multinational firm business objectives, and involves
stages of pre-departure, international assignment execution, and repatriation
(e.g. Gibson et al., 2015; Szkudlarek and Sumpter, 2015). This paper makes an
important dual contribution with its examination of possible individual entrepreneurial
dynamics of the self-initiated expatriate (SIE) entrepreneur (or “expat-preneur”)
supporting the growing international entrepreneurship trend, and within a less
traditional, more current and flexible expatriate career paradigm (see McNulty and
Vance, forthcoming). Additionally, we contribute to expatriate studies by taking up the
call by Andresen et al. (2014) to more fully explore self-employed expatriates as an
important, but neglected, segment of the larger cohort of SIEs.
In parallel growth with traditional organizational-assigned international
assignments for guiding foreign operations, there is increasing recognition of an
individual’s central role and responsibility in career management, including for
building global competence and marketable global “career capital”(Cappellen and
Janssens, 2010; Vance, 2005; Hall, 2002; Inkson and Arthur, 2001). The increased
emphasis upon international career self-management is reflected by growing attention
in the international management literature toward SIEs (Andresen et al., 2014; Doherty
et al., 2013), and particularly SIEs employed by organizations (Froese and Peltokorpi,
2013; Jokinen et al., 2008; Tharenou, 2013). The characteristic qualities of initiative,
personal responsibility, and self-management of career among SIEs can exist in
individuals who are either self-supporting and self-employed (Andresen et al., 2014) as
well as those employed within a multinational firm (Altman and Baruch, 2012) or
employed from local markets as local foreign hires (Selmer et al., 2016).
Although the distinction between SIEs and migrants is controversial and murky at
best (cf. Andresen et al., 2014), especially in regions such as the European Union where
the free movement of labor is a foundational principle (Brewster and Harris, 1999;
Favell and Smith, 2006), as well as among those migrants who are highly skilled and
possess strong entrepreneurial intent (“immigrant entrepreneurs”; Kloosterman and
Rath, 2001; Saxenian, 2002), in our conceptualization of expat-preneurs we make a clear
distinction between SIEs (as expatriates) and migrants. Our focus remains only on
expatriates (not migrants) based on McNulty and Brewster’s (forthcoming) definition of
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business expatriates as legally working individuals who reside temporarily in a
country of which they are not a citizen in order to accomplish a career-related goal,
being relocated abroad either by an organization, by self-initiation, or directly
employed within the host country. In comparison, migrants, including immigrant
entrepreneurs, leave their home country on a permanent basis, many with the specific
intent to attain citizenship of a new country (Al Ariss and Syed, 2011; Al Ariss and
Ozbilgin, 2010; Kloosterman and Rath, 2001; Zolin and Schlosser, 2013; Castles and
Miller, 2009) and are primarily motivated by the push of economic and socio-political
necessity (Khosa and Kalitanyi, 2015; Saxenian, 2002). The key distinction between
SIEs and migrants is that a migrant does not conceive of a “host country”that is
providing a temporary stay; rather, the new country is intended to become their home
country. SIEs, on the other hand, perceive their stay as temporary (i.e. short,
for 3-12 months as is the case for short-term assignees; mid to long term, one to five
years for long-term assignees; or indefinitely; Meyskens et al., 2009), and do not view
the host country as their permanent home as doing so would interfere with their “free
agent”mentality to self-direct their career as new (international) opportunities
potentially arise. Thus, SIE status is determined by its temporary nature wherein
citizenship of the host country is not intended, sought after or provided. However, we
cannot assume that a temporary move will not change over time to become permanent
(Massey and Bartley, 2006; Waldinger, 2008) depending on individual circumstances
that are beyond the researchers’control (Doherty et al., 2013).
We make a further distinction in our expat-preneur conceptualization by including
only those SIEs who engage in some form of business or professional employment
(“business SIEs”; McNulty and Vance, forthcoming) as distinct from SIEs typically of a
younger age and primarily motivated to move abroad more by curiosity and perceived
adventure (tourism, traveling, backpacking) than by pragmatic career capital
development concerns (Inkson and Myers, 2003). As we consider them here, business
SIEs go abroad, whether by means of their own resourcefulness or initially as an OE,
primarily due to the perceived value of international work experience for their long-
term personal and professional development (Vaiman and Haslberger, 2013). Business
SIEs, like OEs, are defined as such because they are legally employed as professionals
on a temporary basis in a country they view as hosting their career (i.e. the “host
country”), thus meeting the criteria for being “expatriates”in the context of
international human resource management (IHRM) practice. Unlike OEs, business SIEs
tend to be uninhibited by organizational and occupational constraints, and are
motivated to take charge of their careers rather than to wait for their organization to
arrange for an appropriate career opportunity –in this case involving international
work experience (Andresen et al., 2012). Business SIEs may therefore be ideal
individuals to pursue international entrepreneurship opportunities for themselves
excepting that, unlike migrants and immigrant entrepreneurs (Saxenian, 2002), they do
not live abroad with the intent to stay permanently.
This paper is structured as follows. First, we examine the business SIE concept in
more detail related to the host country labor market in general, and local
entrepreneurial career activities in particular. Based on our observance of developing
trends that also are showcased in the international management and IHRM literatures
(e.g. Vance and McNulty, 2014; Vance, 2005; McNulty and De Cieri, 2016), we then
propose and examine a special general category of business SIEs whom we call
“expat-preneurs”(Solimine, 2015). We show that expat-preneurs emerge in their
entrepreneurial careers in different ways, whether anticipated before moving abroad or
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after moving abroad. In doing so, we consider important contributions that expat-
preneurs may provide in strengthening local host country economies. Next, we
illustrate boundary conditions under which the expat-preneur conceptualization will
and will not apply and theoretically position the phenomenon within theoretical
frameworks of entrepreneurial career development and Turker and Selcuk’s (2009)
entrepreneurial support model (ESM). We conclude by discussing areas for further
systematic and empirical research on the expat-preneur international career
phenomenon, including proposed research questions that require further study, as
well as important implications for MNCs in supporting their long-term success in host
country environments.
Business SIEs and the host country labor market
A primary objective for business SIEs is to obtain local host country employment for
gaining international work experience, facilitating the development of international
competencies associated with global leadership talent and career capital (Vaiman et al.,
2015; Vance and McNulty, 2014; Vaiman and Haslberger, 2013). Business SIEs thus
leverage the demand among established organizations (i.e. large multinational and
domestic firms, government, public sector organizations) that are vying for
international talent in the local labor market (Tharenou, 2013; Tharenou and Harvey,
2006). Especially needed are those that possess the required level of technical and
management skills to meet demands for international business expansion. Talented
business SIEs available for work within a given host country labor market represent an
important alternative to traditional OEs due to their tendency to already be adjusted to
the local host country environment and being motivated to remain employed there
beyond a fixed-contract deadline (Andresen et al., 2014). They also tend to be less
expensive to hire and place in a host country position than OEs, with locally hired
business SIEs typically being paid on a scale similar to local nationals and not needing
special incentives and premiums that often are provided for OEs to gain their
agreement to move abroad (Hanson, 2010).
The demand for business SIEs is on the rise (Froese and Peltokorpi, 2013; Jokinen
et al., 2008; Tharenou, 2013) particularly where regional expertise, such as in Asia or
Europe, represents a highly valued and marketable skill set (Edwards et al., 2012;
McNulty et al., 2013). These “free agent”expatriates represent an emerging and
potentially critical component of a firm’s overall talent pool and global staffing strategy
(Baruch et al., 2013; Shaffer et al., 2012). For example, a recent exploratory study of
business expatriates (defined broadly as individuals working outside of their home
country for an extended duration; see Vance and McNulty, 2014) found that the
majority of the 45 American expatriates studied who were working and living in
Prague, Budapest, Vienna, Berlin, and Rome were hired by local smaller firms into
entrepreneurial roles of new business development and new ventures with local
business partners. A significant percentage of the women in the study (29 women,
16 men) were self-employed as consultants or small business owners (34 percent for
women vs 25 percent for men), suggesting that this particular entrepreneurial pursuit is
attractive for business SIEs, and particularly for women.
Business SIEs may be comprised of individuals who have temporarily relocated on
their own initiative to a desired host country and gained local employment using various
host country career-entry strategies (Vance, 2005), or they may represent former OEs
who simply refused to repatriate (i.e. return to their home country) who then left the MNC
upon assignment completion and remained in the host country to pursue employment
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with other firms (McNulty et al., 2013) or in independent new ventures (Andresen et al.,
2014). With the increasing local demand for leadership talent and professional expertise,
business SIEs may also be traditional OEs who, of their own volition, left their MNC
in the middle of an assignment to accept an employment opportunity with another
company (see Brookfield Global Relocation Services, 2015; McNulty et al.,2013).One
increasingly apparent group of business SIEs is foreign executives in local organizations
(FELOs) –predominantly C-suite executives that are hired into management positions in
host country headquartered companies (not MNCs) –who manage their own careers as
free agents in the global talent marketplace, and who bring professional expertise that is
highly valued by local companies particularly those headquartered in emerging markets
(Arp, 2012). FELOs can be recruited either in their home country, or from abroad. They
possess “world-class”foreign talent that can be leveraged by a local firm immediately
rather than trying to grow such talent from within. Organizations that employ FELOs
are joining a growing number of local companies that are becoming stronger competitors
to MNCs in their local host country, as well as increasingly joining the ranks of global
competitors (Arp et al., 2013; Arp, 2012).
The entrepreneurial business SIE
Certainly all business SIEs as we have described them here (e.g. expat-preneurs,
FELOs) exhibit classic behavioral characteristics and traits of entrepreneurs pursuing
independent work, with their high self-efficacy and internal locus of control, proactive
personality, flexibility, and proclivity to forge ahead in the face of risk and uncertainty
(Prabhu et al., 2012; Yan, 2010). But unlike business SIEs who travel abroad of their
own volition and resourcefulness and subsequently secure employment in the local
host country with locally based organizations or MNCs (Suutari and Brewster, 2000),
entrepreneurial business SIEs (expat-preneurs) while living and working abroad
engage in creatively discovering and exploiting opportunities outside of their home
country domestic markets through initiating their own independent business
developments efforts, or by employment in joint new venture development activities,
that address local consumer demand and business needs (Zahra and George, 2002).
Andresen et al. (2014) suggest that these self-employed expatriates (or foreign
entrepreneurs) represent a difficult-to-access but important segment of the SIE
workforce that remains under-researched. We contend that expat-preneurs are
becoming involved in new venture opportunities at an increasing rate, whether
anticipated before moving abroad or after moving abroad when they recognize
opportunities and engage in entrepreneurial activity as a source of employment. Unlike
“necessity entrepreneurs,”such as low-skilled migrants who generally have little
economic choice and are pushed into entrepreneurial activity for self-support, expat-
preneurs are “opportunity entrepreneurs”who have more flexibility and options to
allow enterprise exploration, and tend to have higher marketable skills, which they
utilize in observing, recognizing, pursuing, and exploiting local opportunities, as well as
in potentially making greater local economic contributions (Borozan, 2014; Deli, 2011;
Block and Wagner, 2010).
We conceptualize that expat-preneurs develop in two major ways. The first major
development category we call “pre-departure expat-preneurs,”who move abroad with a
preconceived entrepreneurial purpose. As with FELOs who elect to move abroad and
work for host country headquartered (HQ) organizations that are interested in their
expertise to support plans for new business growth and development at home and
abroad, pre-departure expat-preneurs already have plans for new venture development
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and entrepreneurial activities prior to heading abroad. Some make their way to a target
host country on their own to immediately launch a new business, as is the case of
Australian brothers and businessmen Julian and Christian Tan who set up three food-
and-beverage businesses in Singapore in 2012. By their own admission, they spent
“many years […] travelling the world looking for opportunities while we were still
doing our corporate jobs”as an investment banker and project manager, respectively,
before deciding on the food-and-beverage industry in Asia (Whang, 2015). Others do so
to expand an existing home country small business into a new location. This does not
imply setting up a subsidiary office abroad while retaining a home country HQ, but
moving the whole company to another foreign location. The relocation of the talent
management software company PageUp, from Melbourne to Singapore, is a case in
point. The owners of the company, Simon and Karen Cariss, who had never lived
abroad before or owned and run a business outside of Australia, moved their
Australian headquarters to Asia in 2013 to operate a more profitable and efficient
business that was closer to their Asian clients. The relocation subsequently required
that the entire family (including three young children) also relocate to Singapore
(Fitzsimmons, 2013). Having successfully established the company’s presence in many
of the emerging markets the region has to offer, this enterprising couple epitomizes the
spirit of the expat-preneur.
Another form of pre-departure expat-preneur launches business abroad by means of
a traditional OE assignment, however, with a specific pre-existing intention to then
seek out a new venture opportunity in the host country and self-initiate departure from
the MNC at the appropriate time. Thus, in this instance the traditional international
assignment is perceived as an instrumental vehicle to gain placement abroad for
eventually pursuing entrepreneurial ventures. This is precisely the expat-preneur
journey of American Mark Edleson, President of Alila Hotels and Resorts Indonesia
(now headquartered in Singapore), who in the 1970s, and in spite of his lack of interest
in business, undertook international assignments with Citibank to the Philippines,
Colombia, and Indonesia, predominantly out of a deep desire to live and work abroad
and particularly in Asia. He subsequently left the bank in 1983 to set up his own
financial advisory firm with two Americans, also living in Jakarta. After a ten-year run
as the financial adviser to the founder of Indonesia’s Aman Resort, Mr Edleson founded
Alila in 2001 (Lee, 2015).
These cases highlight that expat-preneurs who develop in this way based on a
preconceived mindset are engaging in a form of “entrepreneurial bricolage,”i.e., as
“creating something from nothing”(Baker and Nelson, 2005, p. 329). We conceptualize
them as pre-departure expat-preneurs on the basis that their international
entrepreneurial career was preconceived and set before moving abroad, whether
they began this new venture development activity immediately or leveraged traditional
international corporate employment (via an international assignment) as a means to
attain foreign market placement and subsequent expat-preneur status. The latter two
examples above of the Cariss couple and Mark Edleson also exemplify a process of
“entrepreneurial learning”in a type of on-the-job traineeship (Politis, 2005). Moreover,
all the cases illustrate the phenomenon of “serial entrepreneurship”through the
creation of various businesses over a period of years (Wright et al., 1997).
A second major way in which expat-preneurs emerge is by developing ideas and
intention for an entrepreneurial career only after they have first ventured abroad as an
OE or business SIE seeking some form of international employment. For these
individuals, the impetus is not due to a deeply held pre-existing intention to engage in
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international entrepreneurship, but instead emerges from happenstance or unexpected
personal or professional circumstances. For this reason, we conceptualize them as
“transitioned expat-preneurs”because their international entrepreneurship career path
became apparent to them only after moving abroad. A case in point is American
Danielle Warner, founder and CEO of Expat Insurance, a successful independent
insurance brokerage with head offices in Singapore and Hong Kong (Maree, 2016). She
started the business from her kitchen table in Singapore, as the accompanying
girlfriend of her now-husband when his company sent him to Singapore as an OE. At
the time, Danielle struggled to find insurance locally that met the couple’s personal
needs and began to wonder if other expatriates faced similar challenges. By chance, a
friend convinced her to help his company tailor-make an employee insurance benefits
program for 300 employees. Today, with more than 20,000 clients worldwide and a full-
time staff of 30 from 14 different nationalities, the business is flourishing with more
plans to expand. Unlike the necessity entrepreneur who tends to be low-skilled and has
no other economic recourse for survival, transitioned expat-preneur Danielle
exemplifies an opportunity entrepreneur who has higher skills and is motivated by
enterprising intent, and is able to recognize a viable new venture opportunity (Borozan,
2014; Block and Wagner, 2010; Deli, 2011).
The unplanned entrepreneurial nature of this particular woman’s business SIE
experience is shared by others like her who relocate abroad and, choosing to remain in
a host country, seek self-employment or other new venture opportunities to financially
and legally support their international sojourn or permanent residency while there.
This type of transitioned expat-preneur career path is exemplified in another case
example such as Australian Annette Lang, the founder of Expat Kitchen, who created
the cooking school in 2008 in Singapore after her husband’s MNC employer, at the end
of their two-year assignment, gave him the option to repatriate or to localize in order to
continue living and working with the MNC in that host country. The profitable Expat
Kitchen business employing six part-time staff was created by Annette (an
accompanying spouse at the time) to help them maintain their international lifestyle
with two growing children (Mohn, 2011). American Jill Danielson, also once an
accompanying spouse, similarly became a Subway franchisee and restaurant owner in
Singapore to financially and legally support her family’s ambition of remaining in
Singapore indefinitely, but as localized expatriates (Maree, 2015).
Another important form of transitioned expat-preneur, especially disruptive of
MNCs’ongoing staffing and retention plans, involves OEs who leave, upon their own
initiation (thus making them SIEs), their MNC during or at the completion of an
international assignment and transition into some form of international entrepreneurial
new venture activity, often in the same host country environment. Consider an
American expatriate in South Korea who explained the following when asked by one of
the authors for assistance in identifying OEs for survey research on expatriate
adjustment:
I don’t know how much I can help you in finding company assigned expats who have been
working within the last five years. I finished my own company assignment in 2008 and stayed
on in Korea rather than returning to the US. All of the expats that I know these days are in
Korea with their own business, mostly marketing or English education related, rather than
being here on a company assignment.
The above quote suggests that the number of these OE-transitioned expat-preneurs is
not inconsequential. In fact, the previously-noted top reason for OEs leaving their
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traditional MNC assignment before completion as being the acceptance of other outside
employment opportunities (Brookfield Global Relocation Services, 2015) begs the
question: how many of these OEs leaving the MNC assignment midstream become
transitioned expat-preneurs who have recognized a new venture opportunity and
“jumped ship”to pursue that opportunity? The above cases and scenarios highlight that
both pre-departure and transitioned expat-preneurs, and especially the latter who
originate from OE status and transition into local host country entrepreneurial activities,
are potentially more common than extant research on business SIEs suggests, and thus
constitute an important international career phenomenon worthy of further study.
Theoretical positioning of the expat-preneur phenomenon
In order to avoid terminological sloppiness (cf. Molloy and Ployhart, 2012) by failing to
define expat-preneurs adequately or rigorously, we attempt here to establish construct
clarity about the expat-preneur phenomenon by stating the boundary conditions under
which it will and will not apply (Suddaby, 2010; Locke, 2012). This process began
earlier where we clarified important conceptual differences between immigrant
entrepreneurs, migrants, different types of business SIEs (e.g. FELOs, local foreign
hires), and different forms of expat-preneurs. According to learning theory on concept
acquisition, definitions help us understand a concept but conceptual boundaries help us
understand the limits of that concept, i.e., what the concept is not (Tennyson and
Cocchiarella, 1986).
The expat-preneur concept is grounded in how individuals engage with employment
once they are living abroad. Thus, the first condition under which the concept will or
will not apply is that an expat-preneur must be self-employed. The condition includes
all levels of employment, thus avoiding the exclusion of individuals on the basis of job
title or perceived status and does not require employment in a managerial or even
professional role, although given the cost involved it would be rare for an
expat-preneur to be in a lower level (junior or unskilled) position.
The second condition under which the concept will or will not apply is that self-
employment requires the formal registration of a business in a host country for the
purposes of residency. This condition is necessitated by legal compliance in
combination with non-citizenship (including non-citizenship status for dual-nationality
employees; Ernst and Young, 2013; Mercer, 2001) and is determined by the legal
context in which expatriate employment is enacted and whether people have the right
to stay, and are allowed to seek work legally, in a specific country (Baruch et al., 2013;
KPMG, 2009; Mercer, 2010).
This requirement is linked to a third condition related to self-employment and
taxable income, where the formal registration of a business in the host country brings
with it the obligation to declare earnings and, if required, pay tax on those earnings.
The condition of declared taxable earnings is important because it helps to distinguish,
for example, accompanying spouses engaged in “hobby”businesses that generate little
or no revenue, from those whose sole purpose is to run a business to support personal
and family livelihood. As the case examples above show (where accompanying spouses
transitioned into self-employment), all run registered businesses that are profitable,
that employ staff, and that incurs taxation. Thus, there is sufficient “skin in the game”
(or “hurt money”invested) that if the businesses were to fail, the livelihood of the
women involved (as well as their families) would suffer. There also exists a business
plan that takes into account “affordable losses”in the event of a business downturn,
under-performance or closure (Dew et al., 2009). In other words, if self-employment is
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not viable (i.e. the business produces no taxable income, is not profitable, and is
undertaken simply as a hobby), then we do not include it in the expat-preneur concept.
We make this distinction on the basis that successful entrepreneurs, in general, build a
viable business that has value in the marketplace, and the value is determined
externally by earnings, profitability, growth, and market share (Hessels et al., 2011).
Although not a precondition, in most cases those whom we are considering as
expat-preneurs have entered their new entrepreneurial activity immediately following
previous employment with an organization, especially in the case of OE-transitioned
expat-preneurs. The literature on employee entrepreneurship discusses several
possible explanations for why certain employees start their own businesses. While
historical literature in entrepreneurship has emphasized the career transition of the
unemployed into self-employment, most new firms are actually started by former
employees who transition into self-employment (Parker, 2009). Certain individuals
simply decide on becoming entrepreneurs prior to identifying a specific opportunity
(Davidsson and Reynolds, 2009). Employee entrepreneurship can also be driven by
frictions in the parent firm that lead employees to discover an unexploited profitable
opportunity (Franco and Filson, 2006; Freeman, 1986; Hellman, 2007; Klepper and
Sleeper, 2005; Ganco, 2013). Campbell et al. (2012) found that employees with higher
earnings were less likely to leave a firm than employees with less earnings, however
higher paid employees who decided to leave the parent firm were more likely to start
their own firm rather than join another firm. The study drew on theory from HRM
literature that associates higher individual earnings with job performance, and with
positive predictors that include conscientiousness, emotional stability, and
extraversion (Barrick and Mount, 1991; Hurtz and Donovan, 2000; Salgado, 1997).
These same personality traits also are associated with entrepreneurial intentions (Zhao
and Seibert, 2006; Zhao et al., 2010; Campbell et al., 2012). There is empirical evidence of
individual earnings being correlated with ability, experience, and status (Agarwal et al.,
2004; Bhide 1994; Burton et al., 2002; Klepper and Sleeper, 2005; Groysberg et al., 2009;
Elfenbein et al., 2010). Campbell et al. (2012) theorize that high earners started their own
firms for several reasons such as possessing the ability to replicate complementary
assets and transfer resources and opportunities from the parent firm, being motivated
by frustration with parental inertia and belief in underexploited opportunities (Agarwal
et al., 2004; Klepper and Thompson, 2010), diminishing marginal pecuniary gains, and a
higher perceived value to factors such as autonomy and job satisfaction (Blanchflower
and Oswald, 1998; Gompers et al., 2005; Hamilton, 2000; Puri and Robinson, 2007;
Teece, 2003). Emerging markets in particular may present a more compelling array of
underexploited opportunities and attractive challenges compared with international
assignment work with a MNC.
Consistent with Dyer’s (1994) theory development on entrepreneurial careers, expat-
preneurs come to recognize their own self-management responsibility and choice in
opting out of the traditional expatriate and multinational career path and instead into an
entrepreneurial career. We borrow from prior studies on entrepreneurship to suggest that
whether the recognition to develop an international entrepreneurial career occurs before,
during, or at the end of a traditional OE or business SIE experience depends on a number
of factors, including the individual’s personality (Baron et al., 2011), degree of social and
human capital resources available to them (Davidsson and Honig, 2003), the extent of
their ability to engage in local host country “opportunity recognition”(Baron, 2006), and
their propensity for risk taking (Hayward et al., 2010), among other factors. Propensity
for risk taking is particularly salient, as transitioning to expat-preneur status often
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requires a change in the individual’s compensation status from a higher to lower income,
at least initially. This means that OEs will transition to self-funded employment from a
(much higher) home-based compensation and benefits package (the balance sheet
approach), and business SIEs will do so from host-based local employment terms and
conditions (with fewer benefits; Tait et al., 2014). Another particularly salient factor is
that personal circumstances and social relationships often support the decision by
expat-preneurs to remain in the host country for the longer term where, for example,
marriage to a host country national who desires to remain often is a key reason for doing
so (see Vance and McNulty, 2014). Thus, strong personal ties in the host country may
facilitate the degree of social and human capital resources available to the expat-preneur
and the extent of their ability to engage in local host country “opportunity recognition.”
The above notwithstanding, a flexible and self-managing career perspective is
nonetheless essential for allowing one to consider an international new venture career
opportunity in the host country outside of the relative stability of MNC employment as an
OE or business SIE employed as a local foreign hire.
Further to individual choice that encourages career self-management, the ESM also
considers the critical impact of contextual factors on entrepreneurial career intention
(Turker and Selcuk, 2009). In this model, entrepreneurial intention is taken as a function
of educational, structural, and relational supports (Henderson and Robertson, 2000).
For an expat-preneur, his or her educational background and professional experience
provide a foundation for first recognizing the opportunity and then the feasibility of a
new entrepreneurial venture outside of the MNC. For OE-transitioned expat-preneurs in
particular, the significant level of technical and functional knowledge that they possess
(i.e. “prior knowledge”; Baron, 2006, p. 105) is likely to be useful for new business
development, as is their significant organizational experience and their ability to
contribute current state-of-the-art business practices and processes to support
organizational growth and operational success for new business ventures. Thus,
compared to business SIEs who are often perceived as traveling “soldiers of fortune”
(i.e. looking for career development opportunities in a foreign country), OE-transitioned
expat-preneurs likely represent a much more technically experienced and proven
category of professional entrepreneurial business talent. They also represent a
potentially valuable “new”knowledge worker in the local labor sector, and can be
especially important in emerging economies where the availability of skilled talent is
often tight. Local market (environment) conditions similarly provide the economic
structural support and actual feasibility for the recognized entrepreneurial opportunity
(Swaminathan, 1996). This environmental support includes local and national
governmental assistance (e.g. funding, incentives, education), as well as professional
relationships with local business partners who may provide collegial and emotional
support for expat-preneurs in new venture start-ups.
Implications of the expat-preneur phenomenon for host country
economies
Expat-preneurs represent an important influx of talent potentially contributing to
enhanced entrepreneurial strength and economic development of the local economy
(Dearie and Geduldig, 2013; Wadhwa et al., 2012). But besides a more immediate
positive impact on a local economy through new business development, expat-preneurs
in aggregate are likely to make a contribution to the long-term economic health and
growth of a host country through an enriching knowledge spillover effect upon the
local labor sector. This collective spillover effect can result, first, through the sharing of
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explicit knowledge and expertise to new venture employees through systematic
training and development activities, as well as the transfer of tacit knowledge through
informal work interactions with host country employees at all levels (Maznevski and
Di Stefano, 2000). Furthermore, the contribution of human capital to economic growth
is well recognized. Human capital investment and knowledge accumulation play a
critical role in sustainable economic development (Hatch and Dyer, 2004; Silvanto et al.,
2015). Yet, according to the McKinsey Global Institute (2012), a potential shortage of
highly skilled workers is expected to reach about 38-40 million (or 13 percent) of the
demand for such workers, with fewer workers available with the advanced skills
needed to drive high-productivity economies. While developed economies may properly
fill this gap by increasing enrollment in higher education institutions or accepting more
immigrants, particularly immigrant entrepreneurs (Zolin and Schlosser, 2013), an
inadequate supply of highly educated workers could slow down the economic growth
of developing countries such as China, India, Russia, and South Africa (Preston, 2012).
To meet this challenge, expat-preneurs can play a crucial role by engaging in
self-employment opportunities in emerging economies (see Vance and McNulty, 2014
for case studies).
Expat-preneurs can further contribute to the long-term economic health and growth
of a host country through knowledge transfer, i.e., when a developing country exploits
the benefits of FDI as a useful vehicle for knowledge transfer to their economy. One of
the main benefits expected from FDI is the transfer of resources, not only physical
capital but also intangible resources or new knowledge such as sophisticated
marketing tactics, integrated information systems processes, and advanced human
resource management practices (Branstetter, 2006). Given the significance of
knowledge transfer to disseminate and share the core competence of MNCs, OEs
have been used as an instrument to effectively transfer knowledge (Riusala and
Suutari, 2004; Delios and Björkman, 2000; Gaur and Lu, 2007; Widmier et al., 2008;
Bonache and Brewster, 2001), having acquired firm-specific knowledge which is often
tacit and uncodified through experience and training within the unique organizational
context of the parent firm (Tan and Mahoney, 2006). Given the shortage of OEs needed
to meet the increasing demand for international assignments as a result of continued
economic growth of emerging economies (Collings et al., 2007), the availability of expat-
preneurs, and OE-transitioned expat-preneurs in particular, makes them all the more
valuable in these economies in terms of accessibility to their knowledge. Expat-
preneurs trained in the latest management and marketing techniques can help improve
the efficiency of operations in a host country, resulting in higher productivity and
economic growth.
Kostova (1999) contends that the process of knowledge transfer within MNCs does
not occur in a social vacuum, but is contextually embedded. She identified three
different types of contexts: social, organizational, and relational. Social as well as
organizational contexts seem to be particularly relevant in the case of expat-preneurs
when viewed as intermediaries to bring in valuable knowledge or resources to a host
country. The social context consisting of three institutional pillars (i.e. regulatory,
normative, and cognitive; Scott, 1995) have substantial impact on the effectiveness of
knowledge transfer. The more compatible these institutional characteristics between
home and host country are, the greater benefit is produced from knowledge transfer.
Discrepancy in the legal systems or cultural differences at the national level can make it
difficult to execute knowledge transfer across borders. Examples include the cross-
border transfer of the just-in-time system of a Japanese company to its American
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subsidiary (a practice embedded in a symbiotic relationship between manufacturer and
supplier in the collectivistic Japanese culture which needs to be re-contextualized in an
individualistic culture like the USA to effect its successful implementation), and the
inadequate protection of intellectual property rights and inefficient market functioning
in, for example, China resulting in higher transactions costs.
Building upon their past work experience in and desire to relocate to the host
country, or to remain in the host country following assignment completion, it is
assumed that OE-transitioned expat-preneurs possess a solid understanding of the
characteristics and demands of its social context. Their decision to remain there
suggests that they have successfully adapted to the host country’s culture and/or they
feel comfortable living in it. Both pre-departure and transitioned expat-preneurs are
likely to have developed a crossvergence perspective that recognizes the mutual
influence of cultural values and norms between home and host country (Sarala and
Vaara, 2010). In the case of OE-transitioned expat-preneurs, their prior employment
with an MNC is likely to have helped them to already become familiar with host
country institutions and to learn how to leverage their knowledge to such an extent as
to embark on a new business opportunity that best fits the institutional profile of the
host country. It is also plausible that these expat-preneurs made the decision to leave
the MNC due to the incompatibility of organizational contexts that constrained their
ability to make the best use of their knowledge, abilities and skills in order to exploit a
recognized new venture opportunity, and they thus developed the acumen and instinct
to seize a business opportunity in the host country and create their own organizational
context conducive to making better use of their knowledge, inevitably leading to
increased local knowledge transfer.
Future research agenda
Expat-preneurs represent a potentially important international professional career
phenomenon that until now has been largely unrecognized in expatriate studies.
The study of expat-preneurs has the potential to extend, and build on, prior research on
business SIEs, including their career path development. Although this paper makes an
important, albeit incremental, contribution in identifying and discussing characteristics
relevant to expat-preneurs, and highlights potential issues regarding their motivations
and career development, more systematic and empirical research is needed to
increase our understanding of this new type of business SIE. We propose a number of
important research questions that appear to us at this early stage of inquiry to guide
further research to help advance conceptual and theory development related to the
expat-preneur international career construct.
Important areas for future research related to expat-preneurs should include
normative studies to help gain a clearer picture of characteristics of the expat-preneur
phenomenon in its various forms, including how commonly they are found in both
developed and developing host countries. Additionally, and related to the previously
discussed support factors facilitating entrepreneurship careers, it is likely that the
presence of expat-preneurs will be encouraged by a range of factors that include host
country cultural, political, and economic conditions that support their entrepreneurial
activity (Swaminathan, 1996). It is possible that developing countries presenting
greater cultural distance, government instability, and poorer levels of economic and
physical infrastructure may actually discourage international new ventures for
expat-preneurs. Indeed, even in highly developed countries the economic environment
may not present enough enticement to encourage expat-preneurs to invest the
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phenomenon
“hurt money”required for a new venture (see Silvanto et al., 2015). It is also possible
that factors unrelated to the host country economic situation, such as falling in love
with the host country culture or one of its citizens (Vance and McNulty, 2014), may
similarly encourage expat-preneurship. The above notwithstanding, although the choice
to engage in expat-preneurship may appear inevitable for pre-departure expat-preneurs,
it remains a less-inevitable choice for transitioned expat-preneurs who can decide to stay
in OE employment and forego international new venture opportunities.
Therefore, an important aspect worthy of examination is the personal
predispositions that influence expat-preneur self-initiation and transition into an
international new venture (Bauernschuster et al., 2010; Brown et al., 2011; Caliendo et al.,
2009). For example, do certain cognitive and behavioral characteristics predispose
individuals into making the expat-preneur career transition? Specifically, what role
does personality (Baron et al., 2011), the degree of social and human capital resources
available to individuals (Davidsson and Honig, 2003), the extent of an individual’s
ability to engage in “opportunity recognition”(Baron, 2006), and their propensity for
risk-taking (Hayward et al., 2010) play in facilitating expat-preneurship? In fact,
contrary to our earlier suggestion that OE-transitioned expat-preneurs will make more
significant contributions to local economic development due to their potentially greater
level of technical and general business experience and knowledge than younger
business SIE expat-preneurs, it is very possible that the latter will possess a higher
level of self-efficacy and entrepreneurial intent associated with new business
development and thus in actuality make greater contributions to local host country
economic development.
Gaining a clearer understanding of the optimal conditions that support
expat-preneurship would be an important objective for future research. For example,
to what extent is expat-preneurship self motivated (i.e. by pre-departure expat-preneurs)
rather than employer driven as in the case of OE and business SIE transitioned
expat-preneurs who may be unhappy with their employment conditions? Furthermore,
is it actually a strategic initiative of organizations to proactively seek out and invest in
business SIEs as an alternative to traditional OEs, where the former represent a
potentially more motivated from of expat-preneur than the latter? Another line of
questioning involves how expat-preneurs acquire their skill set, i.e., via on-the-job
training, serial entrepreneurship, across countries, globally, and whether it is product or
market focussed. For example:
RQ1. To what extent, and in what numbers do pre-departure and transitioned
expat-preneurs in their various forms engage in international new ventures in
developing and developed economies?
RQ2. Which personality characteristics predispose individuals for expat-
preneurship in general?
RQ3. How do pre-departure and transitioned expat-preneurs in their various forms
tend to differ in personality characteristics and degree of engagement in new
ventures in developing and developed economies?
RQ4. Which factors encourage, and conversely discourage, pre-departure and
transitioned expat-preneurship in developing and developed economies?
As discussed earlier and illustrated in the case examples, gender could play a role in
the development of expat-preneurship. Are males more likely to be pre-departure
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expat-preneurs and to be in possession of a greater degree of technical skills and
professional work experience than females? Are typical business SIEs more likely to be
females who are motivated to go abroad for gaining international experience in general
as part of their early adult personal and career development (Inkson and Myers, 2003)?
On the other hand, business SIE transitioned expat-preneurs could be more evenly
spread with a proportionate mix of males and females. The question, then, is the extent
to which gender encourages or discourages engagement in expat-preneurship,
including pre-departure vs transitioned expat-preneurship. Furthermore, to what
extent do personal life circumstances (marriage, divorce) and stage of family life cycle
impact on the likelihood of individuals engaging in international new ventures? Data on
traditional OEs show that the predominant age group for expatriates is of an older
employee with accompanying family members (Brookfield Global Relocation Services,
2015). Hence, the likelihood that family responsibilities, or lack thereof, can inhibit or
enhance pre-departure vs OE and other transitioned expat-preneurship could be high,
where those who would like to transition to expat-preneurship via OE employment may
be less inclined to do so in favor of retaining a steady income compared to the
“inevitable”pre-departure expat-preneurs. Thus:
RQ5. To what extent are pre-departure and transitioned expat-preneurship in their
various forms influenced by gender?
RQ6. Do personal circumstances and stage of family life cycle and its associated
responsibilities inhibit or enhance pre-departure and transitioned expat-
preneurship in their various forms?
Systematic field studies are also required to examine whether, and to what extent,
expat-preneurs are successful in their international new ventures, including the factors
that contribute to their success. One area worthy of attention is the role that the
pre-departure expat-preneur’s accompanying family members play in supporting a
relocation that involves an international new venture. If we consider that
accompanying family members’difficulty with international adjustment has been
posited for decades as major cause of international assignment failure (Hechanova
et al., 2003; Lazarova et al., 2010), it would be interesting to see if, and how, pre-
departure and transitioned expat-preneur families successfully navigate through their
family challenges while adjusting to living abroad without the types of organizational
support typically offered to OEs. One could argue that, as expat-preneurs are “on their
own”without the comfort and safety net of MNC support, they must develop for
themselves a family skill set that is suited to the lifestyle (i.e. coping with risks,
uncertainty, instability) that an international new venture will impose on them. Thus:
RQ7. What characteristics of expat-preneur family members influence the decision
to relocate abroad to engage in an international new venture, and influence the
relative success or failure of the international new venture?
Conclusion
Research on the expat-preneur phenomenon will undoubtedly increase our
understanding of the economic benefits arising from knowledge spillover,
particularly for emerging markets (Acs et al., 2009). While entrepreneurs from less
developed countries expatriating or migrating to developed countries is well researched
(Clydesdale, 2008; Rusinovic, 2008, Zolin and Schlosser, 2013), less is known about
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phenomenon
skilled, professional entrepreneurs from developed countries who expatriate or migrate
to an emerging economy to then exploit business opportunities in that country (Almor
and Yeheskel, 2013). The positive spillover effects to the local emerging economy from
individuals who expatriate as expat-preneurs could be significant (Dearie and
Geduldig, 2013), and may be especially pronounced for emerging markets in terms of
building local economic vitality, enhancing local professional practice, and developing
the local labor skill base. We posit that pre-departure expat-preneurs in particular are
likely to have the ability to overcome their liability of foreignness by integrating
themselves into the host country through prior cross-cultural experiences as well as
newly formed professional networks that foster their international new venture in the
host country. This growing phenomenon may well represent a new form of “brain
circulation”that builds upon traditional concepts of brain drain and brain gain
associated with the growing mobility of human talent across borders (Tung, 2008).
Additionally, research that is focussed on OE-transitioned expat-preneurs may
help alert MNCs to the importance of providing greater career support for their OEs
during an international assignment, particularly in situations where OEs elect to
leave the organization (taking with them valuable experience and tacit knowledge)
due to dissatisfaction with the OE experience rather than a desire for a new expat-
preneur career. Conversely, even when employees are driven by desire to leave an
organization to venture out on their own, prior research shows that when
organizations are aware of and supportive toward their employees’career interests
outside of the organization, such support can lead to enhanced satisfaction and
productivity (Kulik et al., 2015), as well as extended retention before the eventual
departure (Kaye and Giulioni, 2012). As many of the big consulting firms
demonstrate, staffing and career progression strategies that support the transfer of
employees to join client firms can further strengthen the consulting firm-client firm
relationship for future engagements. Thus, when MNCs support the long-term
professional career interests of their employees in making a successful transition as
expat-preneurs, such behavior quite possibly can contribute to an enhanced
reputation and relationship with the local host country environment and secure an
expanded source of local support and good will.
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Further reading
Cole, N. and McNulty, Y. (2011), “Why do female expatriates ‘fit-in’better than males?”,Cross
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Corresponding author
Charles M. Vance can be contacted at: cvance@lmu.edu
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